As big banks grow bigger, little guy becomes priority

It used to be a given that when big banks merged, the average account-holder would be the big loser. Bank executives, with few exceptions, were fine with losing Average Joes, as long as they kept their high-net-worth customers and, of course, their top-dollar investment-banking business.

The recession, corporate scandals and low interest rates of recent years, however, have demonstrated a major benefit of retail banking. A business based on mortgages, auto loans, checking accounts, ATM transactions and credit cards is steady during tough economic climes.

And with interest rates on the rise, the economy warming up and another wave of bank consolidation cresting, many observers are wondering whether the little guy will remain a priority.

To be sure, many banks have tried to build brands on customer-friendly approaches. Many have tried more dramatic moves to enliven the customer experience. In addition to dropping ATM fees and other service charges, Washington Mutual outfits its branches-which it calls "stores"-with funky decor and music. Internet bank ING Direct, which offers a no-fee savings account called Orange, has foregone brick-and-mortar branches and instead opened cafes.

more retail, less bank

For the top marketing executive at Cherry Hill, N.J.-based Commerce Bank, there's even a tension in term "retail banking."

"We try to be more retail-like and less bank-like," said Chief Marketing Officer John Cunningham. Branches are open seven days a week, and sport Penny Arcades, coin-counting machines that customers and non-customers alike can use.

Several bigger players have made consumers a priority, largely because of the economic outlook. JPMorgan Chase's acquisition of Chicago-based Bank One was largely viewed as a way for a brand best-known for high finance to compete with the wide consumer reach of brands such as Bank of America, Wells Fargo and Citigroup.

But with the merger comes the risk of losing customers to smaller community banks. That is something that Chase and Bank One officials seem to be aware of, given the slowness of their integration, which isn't scheduled for completion until 2007, said Jim Eckenrode, VP of consumer banking at TowerGroup.

"We're seeing a new, more patient and disciplined approach to big bank mergers that take the customer more into view as the strategy and execution of those mergers is developed and rolled out," he said. "That's part of the reason Chase and Bank One are being so deliberate in terms of this integration. They want to get it right and make sure that customers are satisfied as they go through this process."